00:00:00:00 - 00:00:08:19 Unknown Welcome to another episode of the Accounting for California podcast. My name is David Hemphill, the Information Officer here at the California Board of Accountancy., and I'm happy 00:00:08:19 - 00:00:18:23 Unknown to be joined once again by the Executive Officer of the CBA, Mr. Dominic Franzella. Good morning. Good morning. Thank you for joining us. And the president and CEO of the California Society of CPAs. 00:00:18:26 - 00:00:46:03 Unknown Miss Denise Froemming. Really glad to be here. All right. And it's great having the two of you come together again. And with both of your organizations that we can talk about. Really a busy and successful 2025 and then kind of look ahead towards next year with what is what is coming down. So I guess let's start right with, the, the major accomplishment, the, the success, the passage of Assembly Bill 1175, which we spoke about at length in our previous podcast. 00:00:46:05 - 00:01:09:21 Unknown So, it it was signed by the governor on the 3rd of October. So let's start with you, Dominic. What were your, I guess, your final thoughts on that whole process and its path through the legislature? Honestly, a couple of things come to mind. First. Well, it was signed this year. It was really the work for the better part of two plus years, dating all the way back to the sure CPA project. 00:01:09:22 - 00:01:43:29 Unknown And a lot of the successes that kind of went in and came out of that project from the importance of going out and talking to, students, working with the society, talking to the, colleges, the firms, trying to get as much data and information as possible to inform decision making, because at the end of the day, when it passed through, the legislature didn't have any no votes, which means, at least from my end, it was, a successful endeavor by spending the time and working with those groups to address, or at least have them have a voice of what's going into the final product. 00:01:44:01 - 00:02:20:06 Unknown I think the collaboration with Cal CPA was instrumental. It had the regulator and the profession showing that it it had positives for both the consumers and the profession and why it was an important, change and the changes were necessary. And then a last, I would just like to extend my appreciation to Assemblyman Irwin and her team for all their efforts and seeing how important this, modernization to the mobility requirements were, as well as creating flexible, licensure requirements and what that will mean going forward for individuals seeking to enter the profession or practicing in the state. 00:02:20:07 - 00:02:45:29 Unknown So, her team put in a lot of effort, and really were, champions for helping push this piece of legislation through. I, I would say the same. I mean, I would say grateful right now. And for Assemblywoman Jackie and, Dominic for you and Jason Fox for going out and talking to our legislators did a really great job of communicating what we needed. 00:02:45:29 - 00:03:12:25 Unknown The why behind it. And, and then just for all the conversations that happened with other state societies, AICPA Naspa, I mean, there was a lot of intentionality, I think was really important collaboration. And when you said two years, yes, it was it was a journey. It was a journey. And, I'm excited because I hear from students, some of them already are in a good position to move forward, and they see an opportunity to find a different path. 00:03:12:25 - 00:03:32:22 Unknown And I think that's it's really important that we have, different doors that people can walk through. So one just grateful, right? Yeah. Flexibility. So let's kind of set the baseline and remind people of the timeline when the bill will go into effect. There's that implementation window for parts of the bill the license requirements. So you want to speak to that just a little bit. 00:03:32:26 - 00:03:52:13 Unknown Yeah. Everyone's on the same team. This is going to get started. Absolutely. So the bill kind of has a couple of milestones within it, as you were alluding to. First, the modernize mobility. So that idea of CPA, CPA that'll take effect January 1st, 2026. And in all honesty, I don't think anybody's going to see any. There's no real difference that's coming. 00:03:52:13 - 00:04:17:26 Unknown It's kind of the foundational elements, more so than anything practical that people have to adjust to or make any kind of, decisions around. But that'll take effect January 1st 26. The flexible licensure requirements will kick into effect January 1st 27. So that implementation window that you were speaking of and then the, I think the other part of it is actually the legacy pathway, more or less the 150 requirements that you see today. 00:04:18:03 - 00:04:43:23 Unknown There is a, sunset date on those. The final application, need to be submitted by December 31st 28. So there's a couple of milestones, after, this year. But, kind of working through those as we speak. And I know you're already doing some things with your members to make sure, you know, on the, the students, the candidates coming up to make sure they're aware of everything and that we're partnering up with you for something in January. 00:04:43:26 - 00:05:08:11 Unknown Yeah, no. And there's a lot of conversations happening on the academic side with faculty and students, with candidate webinars and us partnering to make sure that we get the the news out there because, please go to our websites to we have a lot of shared information out there, but it's really just to have conversations to make sure that everybody's on board and aware of what's going on in their own individual decisions. 00:05:08:14 - 00:05:35:27 Unknown So so here we are will, depending on when you're watching this may have already taken effect, but January 1st of 2026. So now comes the 12 months, like we said, the implementation window. So maybe get into, you know, without going too into the weeds, but maybe kind of get into some of what is what's happening over the next 12 months to prepare for the new pathway to to kick in on, January 1st of 2027. 00:05:36:04 - 00:05:58:28 Unknown Absolutely. I think the first thing to, to kind of lay out there, is kind of like the making the sausage mentality, the regulatory process, the, the part that goes into that. We spent much of last year while the bill was kind of going through the legislative process, we were focused on how to actually implement it as well, to start that dialog early and get it out there often. 00:05:58:28 - 00:06:24:18 Unknown So we spent much of, 25 on the regulations to implement the bill. Because we were always optimistic it would be signed and we'd have that piece of legislation. So that's been a year, that we've spent dealing with that, had a lot of conversations, obviously, with Cal CPA, the, the large firms, faculty, students, just trying to, develop the regulations around it. 00:06:24:21 - 00:07:00:02 Unknown We anticipate those to hopefully be in place by, fall of this year. So keeping our fingers crossed for that. A couple of other things related to implementation, as Denise was talking about getting the word out, getting the message out. Obviously, we've, been collaborating with Cal CPA on a number of activities. We've also engaged in the campus tour that rock based or rock themed tours over the past, over these past couple of months and during the, the, the fall leg of the tour, as the bill was getting signed or was getting out of the legislature, we had started kicking that off. 00:07:00:02 - 00:07:29:06 Unknown And, that first leg had 12 events with seven, being virtual, five in person. I had an opportunity to do the one at the University of Southern California. These events are awesome, not just for getting with the students, but also the faculty, the, and answering their questions and deep diving into their programs to help them understand how the new licensure requirements will align or what maybe adjustments they might want to be thinking about. 00:07:29:08 - 00:07:53:10 Unknown We're also getting ready to kick off the spring leg of the, campus tour, which will start off in around February. I think we already have five confirmed, schools, one of which is actually CSU East Bay, which is where the board will have its March meeting. So we're, partnering up, with that institution to have a, campus tour. 00:07:53:12 - 00:08:12:02 Unknown I think also, one of the pieces that we've worked, really closely with Cal CPA on and Jason Fox was instrumental in helping us get to the firms, like starting to understand that the firms who are doing the recruitment, what questions are they receiving? How are students who are coming through their internships, are coming through their hiring process? 00:08:12:02 - 00:08:41:12 Unknown What questions of their are they asking, such as, should I wait for the new licensure requirements? Should I apply under the legacy? Is there a benefit? Is there what what are they doing? And so speaking with them and hearing that and offering them not really solutions to those, but suggestions on how people can evaluate and so that as you mentioned, they can open whichever doors they want or take whichever path makes the most sense for, even talked about early entry to the exam and how that can interplay with some decisions people are making today. 00:08:41:12 - 00:09:07:24 Unknown So getting them educated on that. So I'm I'm encouraged and I'm excited to continue that dialog because I would say historically, at least for the cbas, and it wasn't an area that we focused a lot on was the firms and getting the recruitment side of the firms and how people come in. And that is an instrumental part, because those people are hearing the same things as maybe the professors, but from a different lens and, and understanding what's going on there. 00:09:07:27 - 00:09:35:11 Unknown And the other piece for the development in this kind of interplays with the regulations a bit is, getting geared up for the process, the workflow, how this is going to how schools who want to get a CBA recognized degree, get through that process, or the community colleges as they're developing their, CBA recognized certificates, how that's going to work so that, we can maybe hit the ground running with at least a handful of probably, four year institutions. 00:09:35:13 - 00:10:00:09 Unknown You have their degree recognized and how that's going to kind of work. So there's a lot a lot of moving parts, a lot of things going on. But having spent the past year developing the regs allows us to now focus on how to implement those regs. And having some active discussions with with stakeholders. Yeah. The response has been very positive and excited from the university. 00:10:00:12 - 00:10:34:22 Unknown Apologies that we've been visiting, to go along and get these things established for their for their colleges. Yeah. And I would say you can't have enough connections one time. Right. So the, the this is one that is so important to your point and getting with the, the faculty at those universities and community college campuses. And you know, as much as we can just connect and have the conversations we do work with, one of the professors has put together a mark Willis shout out to him, has put together a presentation that we have a, beginning kind of primer before. 00:10:34:22 - 00:10:59:12 Unknown So wherever if you're listening to this and you want information or help, reach out to us because, we want to get it out, what, seven times 7 or 8? Yeah. Just gotta keep talking about it. Yeah, absolutely. Check both of our websites, as you mentioned. Yes. You can always send an email to the outreach inbox. So outreach at CDA, but make sure your questions get answered as we're we're all doing this together. 00:10:59:12 - 00:11:26:19 Unknown You're our partners. So let's look ahead now a little to 2026. And kind of a fun moment for the CDA and the accounting profession in general. So, we go back into these hands of time. So yeah, it was actually, by statute created back in 1901. So do the math. Fast forward and 2026 will be the 125th birthday of the CDA. 00:11:26:19 - 00:11:58:21 Unknown We could also kind of say the the birthday, the official recognition of the accounting profession and the CPA license. So it's kind of a special milestone. And I think we should celebrate is that that is that is the plan. Yeah. So we're obviously we're already working with Kelsey and a couple of ideas and trying to, spread that information and obviously leverage it as a means for promoting the CPA, both for the profession and for consumers, and understanding what our organizations and what the CPA has to offer. 00:11:58:23 - 00:12:17:29 Unknown From our end, a little bit will be dealing with, some, exciting, maybe history projects within the, our update publication and taking a look back in time and little increments and windows to kind of shed the light on the arc of the the board over 125 years. We'll also be doing some, fun stuff on social media. 00:12:18:02 - 00:12:36:28 Unknown So we're kind of in the middle planning stages at this point, so I don't want to share everything. But we have some ideas, and we're excited to work with Cal, CPA and the profession as a whole to kind of promote the CPA designation, both as the consumer protection element from the board and for the value of the CPA license for the profession. 00:12:37:01 - 00:12:59:08 Unknown Congratulations. I would say to all the listeners, you know, be on the lookout, because if it's anything like your Halloween, and yeah, right there will be something for you to engage with. Yeah. Try to commemorate the moment of a big milestone. Yeah. So that'll be something to look forward to in 2026. All right. Let's shift to a topic. 00:12:59:08 - 00:13:07:16 Unknown Now that is is definitely gaining momentum I suppose. Why don't you talk about the, you know, the private equity and the 00:13:07:16 - 00:13:08:14 Unknown alternative practice 00:13:08:14 - 00:13:17:07 Unknown structures that, with those discussions that are taking place at the national level. And I know the CBA kind of did a focus on that at the last meeting as well. 00:13:17:07 - 00:13:37:22 Unknown So where do you see that headed? So, I guess to your point or your question about where do I see it headed? Honestly, I have no idea. I, I really don't I think, while it's been on everybody's radar for a while now, it, it probably took a bit of a backseat during a lot of the discussions related to pathways. 00:13:37:24 - 00:14:01:12 Unknown So things were occurring, within this space for a while. But a lot of regulators attentions were focused on licensure requirements, mobility, those impacts. So I think we're now really getting into the meat of it. And so I'll speak to it from a regulators. Standpoint. Naspa. So the National Association of State Boards of Accountancy has a private equity task force. 00:14:01:12 - 00:14:31:02 Unknown I happen to, serve on that task force. And we released a whitepaper, in October at the, in conjunction with the national meeting. And really, I think when I was working with the, the, the task force on it, my hat was, I want to get out to the regulators so I can get information back from fellow eds, fellow, you know, any anybody in the regulatory space but stakeholders in general, what are they thinking about related to it? 00:14:31:02 - 00:14:55:12 Unknown Here's some of the topics and questions we're thinking about. But are we missing anything or are there questions that you have? So getting out and having this discussion on the white paper, which covers topics such as independence, use of title, public disclosure and, mobility and enforcement. So really core topics, both the profession and to the regulators, the board will be taking this up. 00:14:55:15 - 00:15:17:01 Unknown That white paper in January at is January board meeting and considering some responses back to it. But again, from my perspective, I think the two biggest pieces that the board will be looking at, and that I have my eyes on, really relate to consumer understanding and public disclosure as it relates to these alternate practice structures. 00:15:17:03 - 00:15:43:02 Unknown And the PE involved, and then the use of title, at the end of the day, we don't want to have individuals get a CPA license to not display it or use it. So the consuming public doesn't know if they're working with a licensee. Are they regulated? Is there a place where they can get information on it, the person's current or active, or is there an enforcement issue, or how can they file a complaint if necessary? 00:15:43:09 - 00:16:04:28 Unknown So the use of title and when it's being used and how it's being used is a big discussion. And I think it's not just for regulators obviously has a tremendous impact on the CPA profession from a different lens. But along the same lines of making sure that individuals can use the title. Absolutely. And I would say, too, I mean, I think it's moving from in 2026 for sure will be more, is this real? 00:16:04:28 - 00:16:34:08 Unknown Yeah. Continue to, you know, how do we be responsible? Yeah. And, having kind of that lens and asking the right questions. Looking to read exam as the world is changing and this world is changing so quickly, how do we make sure that we're more aligned? And we have put together an alternative practice advisory? Much like the CPA, when we did our pipeline to really went for the comments that are needed to make sure that we hear from our community, our community so important. 00:16:34:14 - 00:17:00:26 Unknown So it's a very diverse group of firm leaders and making sure that we can represent their voice and what they're saying. Yeah. Okay. Very good. Well, let's talk about another topic that is very prevalent in the minds of, anything from students to the firms. Every one, of course, are on artificial intelligence. So the CBI had a big presentation at its November meeting, about that and some, some statistics. 00:17:00:26 - 00:17:37:06 Unknown The data. That was pretty interesting. So how is the KBA approaching AI, and do you foresee any regulatory issues that may eventually need to be addressed? So first, I like probably everybody else who is there for I want to say was a close to an hour, hour and a half presentation and a lot of engagement. I thought it was a very interactive discussion between the, the, presenters and the board just having a dialog, which I thought was important to kind of answer questions or at least, I guess, pry out questions along the way. 00:17:37:09 - 00:17:59:27 Unknown So I did find it incredibly enlightening. And I want to extend my sincere appreciation to, to Cal CPA, Jason Fox, the Accountants Coalition and Ernst and Young for taking the time and pulling that together and coming out and meeting with the board in person at our office during the board meeting and putting together such a, comprehensive presentation from their lens on how they're doing it. 00:17:59:27 - 00:18:20:09 Unknown And I think that's the important piece of all this is this is that was Ernst and Young's, use of AI and how they're integrating into their firm, and it may be representative of other big firms. It may not it may not represent how a smaller firm or medium size firm would engage. So AI and its usage is, is is at the forefront of a lot of discussions. 00:18:20:09 - 00:18:41:24 Unknown As our members, said at the end of the meeting, I think it was clear they want to keep a pulse on this topic as it relates to what I anticipate over, you know, maybe the next 12 months, I anticipate we'll be monitoring what I'm expecting to be more legislation again this year around AI. Even in light of the, federal administration's direction on regulating AI. 00:18:41:25 - 00:19:06:23 Unknown So there's a competing factors kind of going on, but we'll monitor those pieces of legislation like we did with Cal CPA and the profession last year, provide our input where it seems necessary and appropriate and, we'll focus primarily on how those potential services are being issued to consumers and where AI is involved in that. But I anticipate most of this year to be more again, watching. 00:19:06:28 - 00:19:23:27 Unknown It's important we understand what's going on because it's so evolved so quickly and it changes so quickly, so not trying to get out in front of it necessarily, but not losing sight of what's going on. So I think it'll be a lot of monitoring the legislation and news stories, because there's new stories almost every day about AI and its impact. 00:19:23:27 - 00:19:36:22 Unknown So yeah, licensing. Yeah. There's so many issues that we're dealing with now. Yeah. So it's just an opportunity to really make sure that we stay on top. Yeah. Of what's happening out there. Absolutely. 00:19:36:22 - 00:19:46:08 Unknown So I'm curious about what you're hearing from your membership. Are are there specific concerns they might have with AI or what are they excitement's maybe a little bit of everything. 00:19:46:16 - 00:20:11:04 Unknown Yeah, a bit of everything. So definitely out there there's urgency because they know other firms are implementing new AI. So you know everybody wants to make sure they are competitive. And then there is concern right. So you know we're hearing from them. How do I implement AI. What are the practical I think use case. Something that's extremely important because we all know we can search and research and there's things we can do. 00:20:11:04 - 00:20:29:17 Unknown But what can we really do from a productivity standpoint. And I think more importantly what can we do from a in a top line growth perspective. And so that's one that we're looking at. And then there's also the data piece we hear a lot about from talent and pipeline. Is this going to mean I'm not going to have a job. 00:20:29:17 - 00:20:52:19 Unknown Is assuming they're not going to be happy jobs. You know, quite frankly, you know, entry level maybe not jobs exactly like that. But that's been outsourced anyway. So maybe that's more of an outsource play. But as you, I just would say to anyone out there, it's going to augment what you're going to do. So lean in and embrace it and see where you can, elevate your skills right. 00:20:52:19 - 00:21:08:21 Unknown And upskill. Yeah. So that's what we're hearing. And we're hearing a lot. And we're leaning into that and seeing how we can educate and provide resources on those prompts. Yeah. To ask questions. Yeah. Exactly. Right. 00:21:08:21 - 00:21:25:22 Unknown it's a lot to look forward to for next year. That's exciting. So we got to kind of all ready to go put a little bow on 2025. So thank you, both of you for joining us and sharing a lot of you know, what your organizations are working on and what we do have to look ahead in 2026. 00:21:25:22 - 00:21:37:27 Unknown So thanks again for being a part of the podcast for all of you watching. We wish you seasons greetings and a Happy New Year. We're getting close to that. And like I said, so much ahead in 2026 and we will have more for you right here. On the accounting 00:21:37:27 - 00:21:42:12 Unknown for California podcast. Until next time. Thank you, thank you.